Implementing a PMO is not a panacea to an organization’s project woes. Instead, it is the maturity of the PMO that makes the difference, according to a new study. As a PMO matures and assumes more responsibility in areas such as portfolio and people management, organizational success metrics improve, elevating the PMO’s value to the organization.
Organizations are increasingly implementing enterprise-wide project/program management offices (PMOs), but at the same time, they are wrestling with newfound challenges, according to a new research report by PM Solutions’ Center for Business Practices (CBP). The State of the PMO 2007-2008 found that 54 percent of respondents said that they have an enterprise-wide PMO in place, up significantly from 35 percent in 2006. In 2000, only 47 percent of respondents had implemented any kind of PMO at all. “The spread and growth of PMOs is a strong indicator that organizations recognize the critical value of successful project management,” said Jim Pennypacker, director of the CBP. “Our research shows, though, that simply implementing a PMO is not enough.
PMOs, like all organisms, need to be nurtured and supported to become effective. A PMO’s value lies in its maturity.”
“As PMOs become more mature, organizational success metrics improve”, he added.
· PMOs have been in place 29 percent longer in high-performing organizations (4.5 years) than in low-performing organizations (3.5 years). High-performing organizations are 30 percent more likely to have steering committees (65 percent) than low-performing organizations (52 percent).
· PMO functions performed significantly more by high-performing organizations include strategy formulation, portfolio risk management, benefits realization analysis, contract preparation, outsourcing, project opportunity process development, resource assignment process development, management of a staff of project planners/controllers and business relationship managers, and resource identification and optimization.
· There is no correlation between project managers reporting to the PMO (as opposed to them just being supported by the PMO) and organizational performance. High-performing organizations have larger PMOs (30 percent more staff) and rely on more specialized roles (they have more staff performing those roles), including mentors (136 % increase), team leads (467 % increase), planners (147 % increase), controllers (116 % increase) and relationship managers (698 % increase).
· PMOs at high-performing organizations are 66 percent more mature than at low performing organizations (average level of maturity is 2.9 vs. 1.7).
In addition to these, we also found that
· Organizations average (median) 31 projects per year. Organizations with a PMO work on more projects per year (38) than those without a PMO (18). PMO budgets range from 0 to $50 million a year (with a median average of $600,000).
· The PMO budget is on average, 1.7 percent of the organization’s budget (median).
· Governance issues top the list of PMO challenges: companies lack the compliance structure to make project management processes consistent throughout the organization, and project leaders still labor under conditions where responsibility and authority are not allied. But as PMOs age and mature, they have fewer challenges and are significantly better at meeting all challenges.